A Nation Of Leaders And Winners

On Monday night I had the privilege to hear an
address by Hon Mrs Anson Chan, the Chief Secretary for
Administration in Hong Kong. She was here as part of a
delegation to strengthen trade relationships between our two
countries.

Like many others in the audience, I was
very interested to learn about the impact on Hong Kong of
reunification with China – to see whether it remains a
global beacon of capitalism. According to Mrs Chan the
answer is a resounding yes. She went on to explain their
strategy to maintain that goal.

Hong Kong has
positioned itself as Asia’s World city in the 21st Century -
a country that upholds the rule of law, has an
independent judiciary, a commitment to free and open
markets, a level playing field for all who do business,
and low taxes – corporate tax at 16% and personal tax a
maximum of 15%.

Hong Kong has a bright future. In an
increasingly global world, countries do well when their
businesses are internationally competitive. Hong Kong put
the fundamentals in place years ago and they are reaping the
benefits.

New Zealand has tried to do the same: over
the last 15 years, for a total of four years there have
been determined attempts to put those fundamentals in place
here. Unfortunately for us, although the reforms achieved
some gains, the commitment to change was not enough to
provide the sort of wide-reaching benefits that were within
our grasp.

During the period from 1984 to 1987, the
Labour Government under the stewardship of Roger Douglas
pulled down the shutters of fortress New Zealand. The
currency was floated, loss making government
businesses were sold, subsidies were removed to create a
level playing field for all businesses, and taxes were
reduced from 66c to 33c which as expected resulted in a
significant increase in taxes collected and kick-started the
economy.

Sadly for New Zealand, because Prime Minister
Lange lost his nerve, the reform programme was abandoned
and large sectors of the economy were left in limbo. In
particular workers, displaced by the reform
programme, remained marginalised, unable to re-enter the
highly regulated labour market. Those who were affected to
the greatest degree were Maori.

For a brief period in
time, the National government picked up the reform
programme, deregulating the labour market, and creating
250,000 new jobs in the fastest period of job growth in
the western world. This had an electrifying effect on the
country, and by the mid-90s, New Zealand was on a path to
6% growth, a triple-A credit rating, and an $8 billion
surplus. New Zealand was also ranked third in an
international competitiveness rating, behind Singapore and,
yes, you guessed it Hong Kong.

Sadly, we lost our way and
the goals that were within our grasp slipped out of our
reach. The tragedy is that New Zealand now risks
being overtaken by countries that started way behind.

Just
a couple of weeks ago Dr Yegar Gaidar, leader of
Russia’s Democratic Choice Party and a past acting-Prime
Minister, told New Zealand audiences of the struggle to
transform Russia from a totalitarian regime to a market
economy. They had to bring about changes that we take for
granted.

Introducing a democratic system, building a
market economy to provide the engine for economic and
social advancement, ensuring individual rights and
freedoms, reducing company and personal taxation to 12.5%
to create incentives for investment, jobs and growth.

So
while the rest of the world moves on and overtakes
us, New Zealand languishes with high taxes, serious
over-regulation and a welfare system that traps growing
numbers of families into intergenerational benefit
dependency.

The problem is that it doesn’t have to
be like this. New Zealand could be positive, optimistic and
succeeding in the global economy. A nation where we
provide generous support for those in need and a hand
up for those down on their luck. A “can do” nation
striving for excellence.

Douglas Myers, in an
interview in North & South tells us the secret: “I
believe you start by creating a free environment and
giving opportunities and incentive, not in the form of
subsidies and write-offs, but by bringing taxes down as
low as possible and making people want to work for all of
the right reasons. You keep a safety net and create a
culture that applauds success”.

Governor Mike Harris of
Ontario, Canada, used that strategy to transform his state
from a basketcase to a Canadian leader. His programme of
lowering taxes and reducing the red tape and bureaucracy
that overburdened small business, created incentives for
investment and growth. His welfare reform programme helped
hundreds of thousands of beneficiaries, to break the
bonds of dependency, to get their lives back.

The
Governor of Wisconsin, Tommy Thompson, who visited New
Zealand late last year used literally the same prescription
– lowering taxes to empower families and give them choices
over where to spend or invest their own money, reducing
regulation and compliance costs to enable small business
to become nationally and internationally competitive, and
transforming welfare by putting in place incentives to
support people into work, to strengthen families and to
encourage personal responsibility.

The results have
taken a state that had an entrenched and growing dependency
culture, overburdened by the negative social consequences –
crime and violence, drug and alcohol addictions, teenage
pregnancy, educational failure – to a state that is so
vibrant and successful that it is attracting back home
businesses, as well as sons and daughters, who sought
better opportunities elsewhere.

The results of the
most powerful race in the world are still unfolding.
Eventually we will know who will hold the most powerful
position in the world, presiding over a country that has
experienced the most remarkable growth in history. Some
say it is because the United States has such a strong
economy. I say it is because of the effects of the
welfare reform programme developed by Tommy Thompson and
adopted by President Clinton, which has liberated
millions of families from the limiting and demoralising trap
of welfare.

What makes a country buzz is the energy
of tens of thousands of people all striving to achieve their
goals and aspirations. Welfare reform liberates that
energy.

We all have an inborn human drive to improve life
for ourselves, our families, our communities and indeed
our country. In pursuing our dreams, each and every one
of us becomes a leader, making our own unique
contribution to society. With leadership comes an
understanding that if we all do just a little bit extra in
reaching out to others, together we can have a significant
impact on the well being of our society.

All of this leads
me to the conclusion that with commitment and political
will, we too can transform ourselves into a secure and
prosperous nation. A nation of leaders and winners. A
nation whose government sees its role to promote freedom,
uphold the rule of law, protect property rights, to expand
people’s choice and to ensure people accept responsibility
for their actions. But to do so, we must take a u-turn away
from the policies of the current government and once more
become a country which encourages enterprise, endeavour and
success.

ENDS

For more information visit ACT
online at http://www.act.org.nz or contact the ACT
Parliamentary Office at act@parliament.govt.nz.

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